Speech by Alexey Miller

New Year’s Eve conference call Head of the Gazprom’s Management Committee congratulated his colleagues and summed up the results.

Dear colleagues,

On behalf of the Management Committee and on my own behalf, let me wish you a merry Christmas and a happy New Year!

Speech by Alexey Miller at conference call on occasion of New Year’s Eve

In 2017, we achieved a tremendous amount together. We attained each and every objective we had set for the Company. Above all, I would like to stress that we are right on schedule in our strategic, top-priority projects.

In the east, we are actively conducting the pre-development of the Chayandinskoye field and building the linear part of the Power of Siberia gas pipeline, 1,380 kilometers of which will have been completed by the end of the year. That is two-thirds of the pipeline’s length. And I can say with absolute certainty that on December 20, 2019, we will start supplying gas to China.

This year, we launched the construction of the Amur Gas Processing Plant. The facility is a crucial link in the chain of gas supplies to China. As you are well aware, it will be the largest such plant in Russia and second largest in the world in terms of design capacity.

We are consistently developing our new gas production center in the Yamal Peninsula, with a focus on Bovanenkovskoye, its largest field. We have already increased the field’s peak output to 264 million cubic meters of gas per day. The third gas production facility is currently under construction. We will soon reach the design output of 115 billion cubic meters of gas per year.

At the same time, in order to convey gas from Yamal, we are setting up new gas transmission capacities in Russia’s most important gas transmission corridor at the moment, i.e., the northern one. There, we are building the most advanced gas trunklines in the world with the working pressure of 120 atm. We are expanding the gas transmission capacities in northwestern Russia, such as the gas pipeline stretching from Gryazovets to the Slavyanskaya compressor station.

Preparations for the construction of the Nord Stream 2 gas pipeline are right on track. In this case, we are working with European companies. At present, our European partners are providing financing for this project in a seamless manner. For instance, a few days ago, they fulfilled their financing obligations for 2017.

This year has also been momentous for us in respect of the TurkStream project. We commenced the laying of two strings in the gas pipeline’s offshore section near the Russian coast. We are already working in the exclusive economic zone of Turkey. By now, upward of 650 kilometers of the gas pipeline have been built, which translates into more than 35 per cent of the two strings in TurkStream’s offshore section.

As we all know, both Nord Stream 2 and TurkStream are meant to increase the reliability of gas supplies to our European consumers. It is particularly important because our exports to Europe increase with each passing year. Last year, we set an absolute record for gas exports with 179.3 billion cubic meters. We will beat that amount by the year’s end, with over 190 billion cubic meters of gas delivered to consumers. I would like to note that this year will see several countries at once set new records for Russian gas imports. I am speaking first and foremost about our largest consumers, Germany and Turkey.

Gas consumption has grown in the domestic market as well. This year, the Company’s supplies via the gas transmission system are up by 4.6 billion cubic meters against 2016.

We also gave a major boost to gas production this year, with more than 470 billion cubic meters produced, which is a 12 per cent rise from 2016. In absolute terms, it is an increase of over 50 billion cubic meters versus the previous year.

We are systematically working to ramp up our reserves. For the 13th consecutive year, the reserve replacement ratio is more than 1: it amounts to 1.8.

Extensive efforts continue in the area of underground gas storage. By the start of the heating season, we expanded the potential daily deliverability of Russian UGS facilities to 805.3 million cubic meters, an all-time high for the national gas industry. I would like to underline that it is an increase of 30 per cent from the indicator for the winter of 2010–2011. Which means that, in a mere seven years, we have enlarged the capacity of our UGS facilities by a third.

We are making consistent efforts to strengthen our oil business. By the end of this year, the Gazprom Group will have produced 41 million tons of oil, a 4 per cent rise from 2016.

In 2017, we are also taking stock of Gazprom’s first decade in the power sector. The results are extremely encouraging. Under CSAs – capacity supply agreements – we have built 8.5 GW of generating capacities. We are now near the finish line, as we are erecting our last CSA-based generating facility – the Grozny Thermal Power Plant.

Of course, we carried on with socially significant projects throughout 2017. Chief among them has been the Russian Regions Gasification Program. This year, we laid over 1,700 kilometers of gas pipelines and created the conditions for connecting to gas more than 76,000 households and apartments and 160 boiler houses in over 200 population centers across the country. By January 1, 2018, the average national gas penetration level will reach 68.1 per cent.

Expansion of the NGV market is a crucial aspect of our gasification efforts. In 2017, we built 21 modern CNG filling stations in Russia. The demand for eco-friendly vehicle fuel is growing, which is why the sales of natural gas at the Company’s filling stations are up by 9 per cent versus 2016.

This year has seen yet another landmark – the 10th anniversary of the Gazprom for Children program. As part of that initiative, we have constructed over 1,600 state-of-the-art sports facilities, including 120 modern sports and health centers, which currently provide services to more than 90,000 children. With that, Gazprom has indeed made a valuable contribution to the harmonious development of our youth.

Dear colleagues,

In 2017, Gazprom topped the global energy company rankings. It is one more testament to our reputation as a leader in the global energy market.

We work for the Company that takes on ambitious challenges and successfully meets them. As you know, our investments will reach their peak in the next two years. It can be attributed to the fact that late 2019 is the deadline for some major, nationally strategic projects. I am convinced that we will make that deadline for every project.

Naturally, our main goal, our number one goal, is to provide reliable gas supplies to Russian consumers, especially in the autumn/winter period. In winter, we have to work even harder and more closely than usual. We need to be particularly responsible and careful in every area. Please keep that in mind.

Dear friends,

I would like to once again wish you a merry Christmas and a happy New Year! Thank you for your dedicated and efficient work in 2017. Please accept my congratulations on your new records, which have already become a tradition for our Company. I wish you and your loved ones happiness, good health, prosperity, and all the best!